Death Spiral of Renowned Toronto Firm

Six months after the demise of a prestigious Toronto law firm, many still wonder what destroyed Goodman and Carr.

“It shouldn’t have happened, nor did it need to happen,” Donald Carr, the 78-year-old co-founder of the firm, tells the Financial Post.

Yet it did.

The firm had emerged from an earlier mid-1990s crisis stronger than ever, after abandoning lockstep compensation and putting a skilled individual leader at the helm.

“We were told the goal was to become the No. 1 mid-size firm,” says former partner Glenn Grenier, “to be able to do the work that the [national firms] do, but to do that on a smaller scale, at a more economic rate, and for mid-size clients who couldn’t justify paying national rates.”

By 1997, the firm was hugely profitable, the Post reports in a magazine-length story. But then Goodman and Carr began to go downhill. In retrospect, many see two major issues: A lack of loyalty on the part of rainmaker partners recruited laterally with promises of top compensation. And a lack of leadership on the part of longtime managing partner Gary Luftspring, who led the firm to renewed success but then allowed young, inexperienced partners to handle day-to-day management.

When a senior statesman was needed to meld the firm’s divergent partners into a cohesive team, none was at hand. “Gary is a brilliant man and a very good manager, but he’s got the bedside manner of Attila the Hun,” says Peter Israel, an eight-year veteran. “For people who needed to be coddled and cajoled, he was the wrong manager.” Even lawyers who weren’t prima donnas reportedly resented the way they–and especially the women, it seemed–were left out of the loop concerning firm management and decision-making.

Then, when rainmakers began to leave, it was difficult to recruit replacements. In the 1990s, a recessionary economy helped, but a decade later the big-firm legal market was booming. A possible merger with the Toronto office of Baker & McKenzie didn’t pan out. Nonetheless, the firm might still have survived, except no senior partner stepped forward to lead it back into the black.

“The firm that ended on March 13, 2007, wasn’t the Goodman and Carr the original partners built,” the Post writes. “The culture had withered, the trust was gone, and the will to continue together had dissipated. So, rather than face a difficult and painful recovery, Goodman and Carr committed suicide.”